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Secretarial Audit

The concept of secretarial audit was introduced by the Companies Act, 2013. It is a process to check compliances made by the Company under Corporate Law & other laws, rules, regulations, procedures etc. It is a mechanism to monitor compliance with the requirements of stated laws and processes. Periodic examination of work is necessary to point out errors & mistakes and to make a robust compliance mechanism system in an organization. This is done through the secretarial audit report.

Advantages

Good Governance

Secretarial audit lays the foundation for good governance which helps the company to go the extra mile to achieve stability in business.

Lesser chance of penalties

Companies with an effective secretarial audit programme have lesser chance of receiving penalties, both monetary and imprisonment.

Mitigation of risk

It provides the Non-executive/ Independent Directors with the comfort that appropriate mechanisms and processes are in place.

Process

Understanding Compliances applicable to client.

Collecting documents & information as required.

Carry out Audit & Advice process.

Secretarial Audit Certificate sent to you...!!!

FAQs

What is Secretarial Audit?

Secretarial Audit is an audit to check compliance of various legislations
including the Companies Act and other corporate and economic laws
applicable to the company.

The Secretarial Auditor expresses an opinion as to whether there exist
adequate systems and processes in the company commensurate with the
size and operations of the company to monitor and ensure compliance with
applicable laws, rules, regulations and guidelines. Secretarial Audit helps to
detect the instances of non-compliance and facilitates taking corrective
measures. It audits the adherence of good corporate practices by the
company.

It is therefore an independent and objective assurance intended to add value
and improve operations of the Company. It helps to accomplish the
organisation‟s objectives by bringing a systematic, disciplined approach to
evaluate and improve effectiveness of risk management, control, and
governance processes.

Secretarial Audit thus provides necessary comfort to the management,
regulators and the stakeholders, as to the statutory compliance, good
governance and the existence of proper and adequate systems and
processes.

What are the benefits of Secretarial Audit?

Secretarial Audit can be an effective multi-pronged weapon to assure the
regulator, generate confidence amongst the shareholders, the creditors and
other stakeholders in companies, assure FIIs/FIs/SFCs/SIDCs/Banks and
instill self regulation and professional discipline in companies. It is a tool of
risk mitigation and will allow companies to effectively address compliance
risk issues. It helps the companies to build their corporate image.
Secretarial Audit facilitates monitoring compliances with the requirements of
law through a formal compliance management programme which can
produce positive results to the stakeholders of a company:
(a) Promoters
Secretarial Audit assures the promoters of a company that those incharge
of its management are conducting its affairs in accordance with
the requirements of laws and the owners‟ stake is not being exposed
to unintended risk.
(b) Non-executive/Independent directors
Secretarial Audit provides comfort to the Non-executive/Independent
Directors that appropriate mechanisms and processes are in place to
ensure compliance with laws applicable to the company, thus
mitigating any risk from a regulatory or governance perspective.
(c) Government authorities/regulators
It also facilitates reducing the burden of the regulators in ensuring
compliances and they can take timely actions against the offenders.
(d) Investors
Secretarial Audit helps the investors in taking informed investment
decision, as it evaluates the company in terms of compliance and
governance norms being followed by the company.
(e) Other Stakeholders
It is an effective due diligence exercise for the prospective investors or
joint venture partners. Further Financial Institutions, Banks, Creditors
and Consumers can measure the law abiding nature of company
management.
(f) Benefits to the company itself
— Companies that go the extra mile with their compliance programs lay
the foundation for good governance.
— Companies with an effective compliance management programme
have lesser chance of receiving penalties, both monetary and by way
of imprisonment.
— Companies that imbibe business and personal ethics and an effective
compliance management programme within their work culture often
enjoy employee and customer loyalty and public respect for their
brand, which can translate into better market capitalization and
shareholder returns.
- Recognition for the company as a good corporate citizen.
The Secretarial Audit provides an in-built mechanism for enhancing
corporate compliance generally and help restore the confidence of
investors in the capital market through greater transparency in corporate
functioning.

Who can conduct Secretarial Audit?

Only a member of the Institute of Company Secretaries of India holding
certificate of practice (company secretary in practice) can conduct
Secretarial Audit and furnish the Secretarial Audit Report to the company.
[Section 204(1) of Companies Act, 2013]

Which companies are required to undergo Secretarial Audit?

As per section 204(1) of Companies Act, 2013 read with rule 9 of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014, the following companies are required to obtain Secretarial Audit
Report:
Every listed company;
- Every public company having a paid-up share capital of fifty crore rupees
or more; or
- Every public company having a turnover of two hundred fifty crore rupees
or more.
“Turnover” means the aggregate value of the realisation of amount made
from the sale, supply or distribution of goods or on account of services
rendered, or both, by the company during a financial year. [Section 2(91)]

Whether the Secretarial Audit is voluntary or mandatory as per
the provisions of Companies Act, 2013?

Pursuant to the provisions of section 204 of the Companies Act 2013, every
listed company and company belonging to class of companies as prescribed
is required to annex with its Board‟s report, a Secretarial Audit Report given
by a Company Secretary in Practice.
Companies which are not covered under section 204 may obtain Secretarial
Audit Report voluntarily as it provides an independent assurance of the
compliances in the company.

What is periodicity of Secretarial Audit?

Proactive Secretarial Audit on a continuous basis would help the company in
initiating corrective measures and strengthening its compliance mechanism
and processes. It is therefore, advisable that the Secretarial Audit is carried
out periodically (quarterly / half year / annually) and adverse finding if any,
is reported on interim basis to the Board immediately.
The Secretarial Audit Report to be annexed with Board‟s report is required to
be submitted before the preparation of Board‟s Report.

What is the format of Secretarial Audit Report?

Secretarial Audit Report is required to be provided in the format prescribed
in Form MR-3. (Rule 9 of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014).

In case of financial laws like tax laws and Customs Act etc., Secretarial
Auditor may rely on the Reports given by Statutory Auditors or other
designated professionals.

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Our service gamut includes a varied range of advisory and assurance products specifically designed to meet and assist an organization in all its decision making processes ranging from incorporating a new Company to undertaking corporate advisory and structuring/re-structuring activities.